AT/Freeport Indonesia pays US$1.2bn in tax

JAYAPURA, Papua - PT Freeport Indonesia (FI), which has been in the spotlight for alleged environmental-unfriendly gold, silver and copper mining activities in Tembagapura, Mimika district, paid US$1.2 billion in tax, dividends and royalties to the Indonesian government last year.

The report was revealed to ANTARA by the National Commission on Human Rights (Komas HAM) of Papua chapter.

PT Freeport Indonesia, a subsidiary of US giant copper and gold company Freeport McMoRan, also paid the government US$3.8 billion in 1992-2004, the commission said.

The National Commission on Human Rights received the report from PT Freeport Indonesia in Timika, capital of Mimika district, last week.

PT FI has thus made contribution of US$4.4 billion totally between 1973, the time the joint company started its operation, and 2005.

Indirect benefit which was made by the world`s third largest gold mining firm totaled US$736 million in 2005 including US$64 million for local people development program.

Hence, the company gave indirect financial advantage of US$9.99 billion to the government between 1992 and 2005.

Meanwhile a report which was formulated by the Jakarta-based University of Indonesia`s economic and management study institution (LPEM-UI) in 2005 showed that PT FI made contribution of 2.37% to the Indonesian GNP, 70.39% to Papua`s gross provincial product, and 98.93% to Mimika`s gross district product.

LPEM-UI also reported that PT FI produced an average of 215,000 tons of ore with 1.14% copper concentrate, 1.67 grams/ton of gold and 4.43 grams/ton silver a day last year.

The company also produced concentrate containing 30.0% copper, 41.3 grams/ton gold and 74.0 grams/ton silver in 2005.

The concentrate from Cartenz Mountain`s feet has been sold to Bulgary, China, Finland, India, Japan, Korea, Spain, Sweden, the Philippines and an Indonesian firm in Gresik (East Java).

Indonesia (Elang, Sumbawa). A recent guerrilla attack on a Newmont Mining Corp exploration team forced the company to evacuate 130 people and suspend operations in the area. This attack follows numerous violent protests against the resource extraction industry in the country -- which generates 12 percent of Indonesia's GDP. It's a great example of the trial and error approach (release innovations early and often) that open source guerrillas use to rapidly find systempunkts (network vulnerabilities that yield huge leverage). Indonesia's Systempunkt

While this initial attack was relatively innocuous, it will quickly develop into a larger campaign against mining companies in the country. The long supply lines and relative concentration of resource extraction efforts offer numerous avenues of attack. Unlike the earlier relatively unsuccessful attacks on Bali (and the planned attack on Goa in India), it aligns with global guerrilla theory in the following ways: Environmental damage. Companies like Freemont-McMoRan and Newmont Mining Corp have caused (like Shell, Chevron, Total, and Agip in Nigeria) massive environmental damage. This aligns local interests with those of the global guerrillas. As a result, numerous allies will be found (from a variety of different sources) to populate the open source insurgency. Kleptocracy. Payments from the mining industry flow to a combination of corrupt government/military officials (that are paid money to protect mining interests) and private interests. The result is that local people get nearly nothing for the use of their land (as seen in Balochistan, Iraq, and Nigeria). Attacks are therefore seen as a means of economic justice (which is yet another source of recruitment). It will only be a matter of time before armed theft from these mining companies becomes a bazaar (an economic system that aligns transnational crime with local guerrillas). Corporate weakness. Attacks on corporate psychology (see Halliburton targeting for more) have worked effectively in Iraq and Nigeria. It takes very little to force companies to withdraw personnel and investment as well as shutter operations if done correctly. The reason is that today's corporate market-based moral center is relatively is adverse to uncertainty or high levels of risk. While mining and oil companies have used corporate security in the past (and even private military companies) to protect their interests, this is a entirely new level of threat (as Shell found out in Nigeria). This points to the development of a new type of corporation (that has high levels of private military capability), on the Halliburton model, that can assume high risks and get compensation for it. These new armed companies will actually become active participants, in alliance with governments, in counter-insurgency campaigns. Model: British East India Company.Posted by John Robb on Monday, March 20, 2006 at 08:43 AM | Permalink